Weekly Update: November 4, 2015

| November 4, 2015

Weekly Update: November 4, 2015

 

Big Picture Outlook:

Let’s touch on some important housekeeping measures today…

It was recently brought to my attention that some subscribers may not be getting their trade alert/weekly update emails in a timely fashion- if at all.

Here’s what happened…

A valued subscriber couldn’t find yesterday’s trade alert email.  Of course, a missing or delayed trade alert can cause problems entering the recommended option contract at a fair price.

But after some research, it was discovered the missing email was in the subscriber’s spam/junk email folder.

To avoid this scenario, please make sure our email address, [email protected], is whitelisted with your email provider.

If it’s not, valuable trade alert and weekly update emails may go unnoticed.

That brings me to another point…

I was made aware of this subscriber’s situation via Twitter.  As you may know, over the past few weeks I’ve mentioned that anyone can follow me on Twitter via my handle: @CommodityRes.

By following me, you’ll receive timely posts on commodity related topics and other market related information.  Fact is, Twitter a great way to keep tabs on what I, as well as other industry experts, think about the current market.

Keep in mind, Twitter is 100% free. All you have to do is sign up and get the app on your mobile device and/or computer.

But please be aware…

I cannot give personalized financial advice via Twitter.  While I’m happy to give pointers and tips about trading in general, I cannot personally recommend what you do with a particular option position.  That information is reserved for our trade alert/weekly updates, which you’ll find in your email inbox.

With that out of the way, let’s check in on a few of our open positions…

 

Portfolio Highlights:

Editor’s Note: I won’t update every open position in every update.  I focus on the positions with significant news or price movement.

. . . . SPDR Gold Trust $GLD November 20, 2015 $111 puts

Well folks, last week’s FOMC announcement stuck a dagger into the heart of gold bulls.  The commodity has plunged over $70 an ounce since their hawkish statement.  What’s more, it appears the commodity has the momentum to drop to $1,100 or lower in coming weeks.

Now, listen closely…

I realize this was a tricky trade to manage.  $GLD rallied to our risk control line at $112.50 the day of the FOMC announcement.  As a result, conservative investors may have chosen to close this trade.  If you did, don’t get frustrated that you’re missing out on gains.

After all, disciplined trading is the key to long-term success.

However, there are aggressive traders that swing for the fences with each option trade.  In other words, they’re willing to risk the full amount of their option contract purchase price in each new position.

With that said, if you’re still holding these $GLD $111 puts, you’re sitting on some very nice gains.  In fact, $GLD has already surpassed our first target at $109 and our second target at $108.

Therefore, everyone should have already collected most of their profits in this trade.

However, if you’re in the enviable position to hang on to a small remaining $GLD put position for the chance of additional downside in gold, do so.

. . . . Newmont Mining $NEM November 20, 2015 $18 calls

Despite the fact gold is careening lower, $NEM is holding up incredibly well. The gold miner is trading just shy of $19 a share, which is not far from the recent multi-month highs at $20.57 set a few days ago.

How is $NEM able to fight off gold bears?

The company recently reported Q3 earnings that were well ahead of analysts’ estimates.  $NEM brought in $0.23 a share in earnings, which is better than the $0.19 expected.

Remember, this trade already achieved our first profit target at $19.00 weeks ago.  As a result, everyone should have collected some nice profits.

If you’re aggressive, you can hold a small $NEM call position for the possibility of higher prices.

. . . . Market Vectors Gold Miners $GDX December 18, 2015 $16 puts

As you know, this trade was released just after the FOMC meeting last week.  Thanks to the downturn in gold, $GDX is slowly working its way back to the 52-week lows set in September.

The recent downturn has our $16 puts trading up to a $1.73 bid as I write.  That’s a 32% gain from our entry at $1.31 last week.

Should $GDX break below minor technical support at the $14.50 area, it should easily drop to our first profit target at $14.00.

Keep holding these puts for further downside in gold miners.

. . . . ConocoPhillips $COP January 15, 2016 $57.50 calls

$COP is seeing some backfilling price action today as the price of WTI crude falls back towards $46 a barrel.

What’s sending crude lower?

This morning’s EIA inventory report revealed a 2.8 million barrel build for the week of October 30th.  What’s more, there was an unexpected upturn in US production.

Clearly, WTI will have a hard time holding onto any gains with fundamental developments like that.

Keep in mind, our call trade in $COP is purely based on the promising technical breakout put forth in yesterday’s trade alert.  Should $COP fall below the risk control line at $53.90, conservative investors may want to close this trade.

. . . . Franco-Nevada $FNV October 16, 2015 $40 puts

Aggressive traders who remained in these puts after our $44.15 risk control line was hit, saw them expire worthless on October 16th.  This trade is officially closed.

 

Category: Commodity Trading